The company on Tuesday announced a restructuring that will result in it laying off 37% of its workforce. This follows Monday’s abrupt exodus of the company’s chairman, president/CEO, and SVP of business affairs.

Mad Catz mcz executives remained bullish about the game, though, saying the launch of Rock Band 4 was strong and resulted in the second highest third-quarter sales in the company’s history.

“The successful launch of Rock Band 4 this holiday season was a considerable achievement for Mad Catz and it demonstrates the capability of our distribution platform,” said Karen McGinnis, the company’s new president and CEO, on a call with analysts.

That sounded good--for a few seconds. That’s when McGinnis acknowledged that sales of the game were actually lower than forecast. (The game had a strong October and early November, CFO David McKeon added, but stalled after Black Friday.)

Then she acknowledged the company was forced to offer deeper discounts than it had hoped as retailers had excess inventory on hand. That, in turn, hurt the company’s margins. Also, European sales of the game were especially weak.

Despite that, Mad Catz (which, before Rock Band 4, was exclusively a peripheral manufacturer) says it’s counting on the game’s long tail to help turn things around for the company.

McGinnis says the company plans “to position Rock Band 4 as the platform production for this generation of consoles--adding new features and new gameplay over time. We're intent on playing the long game…and making this exciting product a long term sales opportunity.”

The layoffs, which officials say will save the company $5 million per year, aren’t being tied directly to the fate of the game, but instead come because Mad Catz failed to grow as it had hoped to.

“Over the past few years we have really built the company that was really designed to be able to scale to a much larger revenue base than we have today,” said McGinnis. “As we…look at where we’re headed going forward, we just wanted to take some of the complication [and redundancies] out of the business…so that we can move forward with the lower cost structure without jeopardizing actually the strategy or our ability to execute going forward.”

]]>http://fortune.com/2016/02/10/rock-band-staff-cuts/feed/0Rock Band 4morrisatlargeGamers Boo New Music Titles off the Stagehttp://fortune.com/2015/11/13/gamers-boo-new-music-titles/
http://fortune.com/2015/11/13/gamers-boo-new-music-titles/#respondFri, 13 Nov 2015 16:21:54 +0000http://fortune.com/?p=1426005]]>The second act of music video games is sounding a sour note.

The revival of Harmonix’ Rock Band franchise and Activision’s ATVI Guitar Hero both failed to find a significant audience in their first month at retail--traditionally the strongest time for new games. New data from The NPD Group shows Rock Band 4 was just the 10th best-selling game of October, while Guitar Hero Live was 11th, in terms of units sold.

Because the games carried notably higher price tags than other titles (generally ranging from $100 to $250 due to their inclusion of plastic instruments), the rankings came to fourth and sixth, respectively, in terms of dollar sales.

The NPD Group does not release specific sales numbers. But, prior to the release of Thursday’s sales information, analysts said the whisper number on Guitar Hero (based on checks-ins with retailers) was it had sold roughly half of the series’ last installment.

The revival of the music gaming genre was one that always carried a risk. It was just four years ago that the subcategory imploded, largely due to publisher greed in the once red-hot field.

Guitar Hero, at its peak, was a $3 billion dollar franchise, but Activision pumped out new games at a phenomenal pace at its height (including 2009 when it released a mind-boggling three games in the Hero series). By 2011, the well was dry. Guitar Hero: Warriors of Rock, the last installment in the series, sold fewer than 261,000 copies -- with nine different SKUs on the market.

“It’s just not a category that’s getting consumers enthusiastic right now,” Activision CEO Bobby Kotick said on CNBC in 2011. “I think you need to focus your resources on the things that get consumers really excited.”

Sales expectations for both games were moderate, but Activision is better able to absorb a low-performing title. Harmonix is an independent publisher -- and its distribution partner, Mad Catz MCZ, in July, received an audit opinion that included a “going concern” paragraph, sounding an alarm about its “ability to comply with certain debt covenants.”

The poor start is discouraging, but a sliver of hope remains for both games. The holiday shopping season brings out mainstream shoppers who might buy the titles for loved ones based on the name recognition and memories of the originals.

The October sales figures weren’t so disappointing for everyone. Microsoft’s MSFT Halo 5: Guardians was, not surprisingly, the month’s best selling title. That gave Xbox One the boost it needed to claim the top selling console hardware spot away from Sony’s SNE PlayStation 4.

Microsoft said Xbox One sales were up 81% compared with October 2014.

“The strength of the greatest games lineup in Xbox history drove record Xbox Live usage for October,” said Mike Nichols, Microsoft corporate vice president of Xbox Marketing. “It's going to be an amazing holiday for Xbox fans.”

Take-Two Interactive Software’s TTWONBA2K16 was the month’s second best selling title, while Ubisoft’s Assassin’s Creed: Syndicate came in third.

Overall industry sales were up 2% to $805.9 million.

Would tech C-suiters rather play a video game or a board game? Watch this Fortune video to find out:

]]>http://fortune.com/2015/11/13/gamers-boo-new-music-titles/feed/0Guitar Hero LivemorrisatlargeWhy ‘Rock Band 4’ is getting the band back togetherhttp://fortune.com/2015/10/02/harmonix-rock-band-4/
http://fortune.com/2015/10/02/harmonix-rock-band-4/#respondFri, 02 Oct 2015 13:58:54 +0000http://fortune.com/?p=1251094]]>Although it's been five years since gamers had either a new Guitar Hero or Rock Band game, Daniel Sussman, project director at Harmonix Music Systems, says the video game music never died. Harmonix has watched as hundreds of thousands of gamers continue to download new songs and play Rock Band games online.

And on Oct. 6, Harmonix and co-publisher Mad Catz Interactive will unleash Rock Band 4 for Sony PlayStation 4 and Microsoft Xbox One. The game will be backwards-compatible with previous plastic instruments like the drum kit, guitars, and microphone, but players can purchase brand new instruments that have been upgraded with new gameplay options.

Harmonix beats Activision and developer FreeStyleGames to retail stores for the latest head-to-head music battle, as Guitar Hero Live ships Oct. 20.

Michael Pachter, video game analyst at Wedbush Securities, believes Activision ATVI will sell $200 million worth of Guitar Hero Live games and controllers, while Harmonix and Mad Catz will sell $100 million worth of Rock Band 4 games and controllers.

"Rock Band is more expensive, and although I'm sure that they have a ton of money, Harmonix is unlikely to spend as much as Activision promoting the game, so they are unlikely to get as much distribution," Pachter says. "I expect Guitar Hero will sell 4x as many units as Rock Band. I would be surprised if Rock Band exceeded that figure, but wouldn't be surprised if Guitar Hero does, as it is less expensive and available for legacy consoles."

Darren Richardson, president and CEO of Mad Catz, a company that focuses on making video game peripherals, says even $100 million in sales will be a huge boost for his bottom line. Mad Catz will handle global retail sales, promotion, and distribution of the Rock Band 4 game and hardware bundles, as well as make all of the peripherals, while Harmonix will handle all digital sales and content.

Richardson says of the 1.2 million units of Rock Band 3 that consumers purchased, Mad Catz sold approximately 400,000 bundles of the 2010 release, which was a huge shot in the arm for the company. Mad Catz stepped in and took over publishing of the title in November 2011, after MTV Games and EA launched the game in October 2010. This time around, Harmonix is taking the lead from the initial launch of the game.

"We've stripped back to the core gameplay experience as a favorite party band," Richardson says. "Rock Band 3 got carried away with innovation that didn't add to the gameplay. A lot of work went into teaching kids how to learn to play instrument, but people really just wanted to play and have fun with friends and family. We think the timing's right for Rock Band 4 given the installed base of PS4 and Xbox One."

Richardson notes that while Guitar Hero and Rock Band were on hiatus, Ubisoft's Rocksmith music game franchise sold a couple million units a year and keeps plugging away.

"Music games are not dead, it's just the way you interact with music changes from time to time," Richardson says.

]]>http://fortune.com/2015/10/02/harmonix-rock-band-4/feed/0Rock Band 4johngaudiosiAt E3, (almost) every old game is new againhttp://fortune.com/2015/06/17/retro-games-e3/
http://fortune.com/2015/06/17/retro-games-e3/#respondWed, 17 Jun 2015 18:04:21 +0000http://fortune.com/?p=1180655]]>There’s a strong sense of deja vu amongst many veteran E3-goers this year.

At the Activision booth, people are strapping on plastic instruments to once again become a Guitar Hero. Take a walk over to the Los Angeles Convention Center’s concourse hall and competing music game Rock Band has gathered a crowd of onlookers, all waiting on their turn to give it a try.

Down at the Nintendo NTDOY booth, fans are playing a new installment of Star Fox, the first new console game for the character in 10 years. Heck, there’s even a new Tony Hawk game on display.

What’s going on here? Has a retro phase hit the industry incredibly early--or are these a new type of video game zombie, rising from the grave?

The answer, it seems, is a bit of both.

For Guitar Hero and Rock Band, both games can blame their original downturn on publisher greed. Activision ATVI, in particular, pumped out Guitar Hero games at a phenomenal pace at their height (including 2009 when it released a mind-boggling three games in the Hero series). By 2010, the well was dry. Guitar Hero: Warriors of Rock, the last installment in the series, sold fewer than 261,000 copies.

“It’s just not a category that’s getting consumers enthusiastic right now,” Activision CEO Bobby Kotick said on CNBC in 2011. “I think you need to focus your resources on the things that get consumers really excited.”

So is four years enough time to revive sufficient enthusiasm to bring the game back? Activision hopes so.

“They’re no doubt assuming they’re going to be able to attract an audience that’s new--that was in diapers the last time these games came out,” says John Taylor, managing director at Arcadia Research. “One that really doesn’t have an impression of what was and is open to an impression of what might be. … If they can bring an experience that is really fun and sustained, then they have a chance to nail down some market share and be successful.”

At Harmonix, makers of Rock Band, officials say the enthusiasm never really went away. The company stopped making plastic guitars and drum kits, but channeled fans into other music gaming genres, like Dance Central. But, they say, there was always demand for another Rock Band.

“This game was one of the great experiences of the seventh generation [of consoles] and we think it deserves to be playable on the eighth generation,” says Steve Janiak, CEO of Harmonix. “Our hardcore players have been asking for Rock Band 4 pretty much since Rock Band 3. … The chorus got louder the further away we got from [that game]. Every time we announced a game, people would say ‘Where’s Rock Band?'”

The announcement is bringing out the faithful in Los Angeles. Beyond the crowds playing at the show, Harmonix threw an open party at a Los Angeles nightclub Tuesday night for fans that saw a steady stream of fans.

And what of the other revival games? It’s hard to say.

Star Fox is a beloved member of the Nintendo character stable, though he’s not on the same level as Mario or The Legend of Zelda‘s Link. Tony Hawk, meanwhile, just isn’t as cool as he used to be. And just because a game is a critical favorite in a previous generation doesn’t guarantee people will want to play a revamped current version.

On the whole, though, analysts aren’t real excited about the revival trend.

“We don’t have very high expectation for these games at this point,” says Colin Sebastian, senior research analyst with Robert W. Baird & Co.

On the other hand, they note, publishers generally have less to lose with these titles than they would with a brand new IP, for which development costs can run as high as $100 million.

“There’s clearly an investment happening, but they’re also leveraging existing development--and potentially some of the music licenses,” says Eric Handler, senior equity analyst at MKM Partners. “So I don’t think they view this as a significant risk.”

]]>http://fortune.com/2015/06/17/retro-games-e3/feed/0Star Fox Zero video game 2015clmoriarityThis $3 billion game franchise crashed and burned five years ago—but now it’s back. Here’s why.http://fortune.com/2015/04/28/new-guitar-hero/
http://fortune.com/2015/04/28/new-guitar-hero/#respondTue, 28 Apr 2015 20:08:49 +0000http://fortune.com/?p=1097265]]>Activision Publishing, a division of Activision Blizzard, hopes gamers will once again rock out in Guitar Hero Live, which is the first new game in the $3 billion franchise in five years.

Bhatia forecasts the Guitar Hero Live will sell one to two million copies worldwide this fall. Peter Warman, CEO of Newzoo, believes the video game music revival will generate over $100 million globally with Activision's music game accounting for 75 percent of the market.

So with these solid numbers, why did companies abandon the music game genre in the first place? The answer is simple: too much of a good thing.

Guitar Hero ushered in the music game genre in 2005, which reached its pinnacle in 2008 with sales of $1.7 billion. Music game sales dropped down to $900 million in 2009 and accounted for less than $300 million in 2010. By 2011, both Guitar Hero and Rock Band were discontinued.

"Guitar Hero and Rock Band saturated the market and sold consumers too much, too quickly," Michael Pachter, analyst at Wedbush Securities, says. "The fact is that the games were packed with 85 songs each, and that was more than a year's worth for most people. There was just no reason to buy the games every year."

According to Eric Hirshberg, CEO of Activision Publishing, Guitar Hero Live, which has been in development for over four years, is the result of a lot of creative experimentation. Activision didn't target 2015 to relaunch the game.

"Having 10 million Facebook fans after not having a game in the market for five years is remarkable, so the brand is strong," Hirshberg says. "We knew we had that going for us, but we also knew that reinventing this thing was really important. We needed to create something that no one could say, 'been there, done that,' and that even the most hardened cynic would think looks fresh."

"Part of what you're seeing from what we learned with the previous Guitar Hero games is reflected in Guitar Hero TV, which allows us to bring new music to people through this living, breathing 24-hour music network," Hirshberg says. "Before music was tied to new discs, and now we can continually keep the game fresh without requiring gamers to buy a new game every time."

The game, which will launch this fall, will face off against a brand new Rock Band 4 game. While the new Rock Band will be released exclusively for PlayStation 4 and Xbox One, Activision is bringing Guitar Hero to PS4, Xbox One, PlayStation 3, Xbox 360, and smartphones and tablets.

The mobile version of the game, a first for the franchise, taps into a growing audience of billions of smartphone and tablet users is , which follows in the footsteps of last year's Skylanders: Trap Team. Pachter believes people will play Guitar Hero Live with a tablet or smartphone connected to a TV, although the majority will still play on a console.

With so much music--hundreds of playable songs at launch with more to be added digitally--Pachter says Activision learned that consumers won't necessarily buy a new music game every year. He believes if this Guitar Hero game succeeds, a sequel won't be released for two years.

A lot has changed since the music genre dominated the video game industry, but the mainstream appeal of living the dream of a rock star remains strong. The key for the success of Guitar Hero, as well as Rock Band, now squarely lies in what was learned the first time around.

]]>http://fortune.com/2015/04/28/new-guitar-hero/feed/0Guitar Hero LivejohngaudiosiSlash gets in the (video) gamehttp://fortune.com/2013/12/12/slash-gets-in-the-video-game/
http://fortune.com/2013/12/12/slash-gets-in-the-video-game/#respondThu, 12 Dec 2013 19:44:05 +0000http://fortune.com/?p=635570]]>Saul Hudson is better known to millions of rock fans as Slash. And to a younger generation of gamers, the former Guns N' Roses lead guitarist is known for his work on Activision's ATVIGuitar Hero III: Legends of Rock back in 2009 and the new Realta Entertainment BandFuse: Rock Legends Xbox 360 and PlayStation 3 game.

"BandFuse is a very basic concept, in essence really it's Guitar Hero using real strings instead of whatever that was that you used to hit with your right hand," said Slash. “The most frustrating thing about Guitar Hero was you could spend all that time getting good at it, but it was a completely useless skill that people were spending 18 hours a day doing. This game is fun, but it uses a real guitar."

Slash knows firsthand the addictive nature of Guitar Hero. He first saw the game Guitar Hero II on the back of a tour bus. He had his kids with him, and they played the game while he watched. He looked at the soundtrack and was impressed with the catalog of music, which featured a lot of well known rock tracks such as “Shout at the Devil” by M?tley Cr?e, “Monkeywrench” by Foo Fighters, and even Guns N’ Roses’ own “Sweet Child O’ Mine.” Not too long after that, he got his own copy.

"I hooked it up, and I was completely addicted to it for maybe two months," said Slash. "I mastered the game. They couldn't even get me on the phone at that point. I was locked up in my office with my Guitar Hero.“The franchise blew up with Guitar Hero III, which featured Slash on the box.

“I guess the whole idea of a rock star guitarist thing — even just faking it, just a little bit above air guitar — just seemed to turn everybody on,” he said. “I have friends who had kids, and they couldn't believe that the guy on the box was a real person, and they were completely astounded when they would be in the same room with me, 'There's the Guitar Hero guy.'"

There is a direct connection between Guitar Hero and BandFuse beyond Slash. Developer Harmonix, which also created the Rock Band games, worked with Realta to fine-tune the BandFuse experience. The game works with any electric guitar, but there's also a special $180 Guitar Bundle sold exclusively through Guitar Center that includes the game, cables, and an authentic Fender Squier Bullet guitar.

Slash's “Back From Cali” song from his 2010 self-titled solo album is one of the tracks aspiring musicians can learn in the game, along with 54 hits from the past five decades such as Blink-182's “All the Small Things" (2000s), Megadeth's “Hangar 18” (1990s), Judas Priest's “Breaking the Law” (1980s), and Cheap Trick's “I Want You To Want Me” (1970s).

Games like BandFuse and Ubisoft's UBSFYRocksmith franchise are bringing about a resurgence in videogame music at a time when many schools have eliminated musical education. Slash has spent a lot of time supporting different organizations that are implementing music programs in schools or making private ones, but gaming is opening up a new opportunity.

"If somebody wants to learn how to play to guitar, it's one of many options available today," said Slash. "Some people might stumble on it because they like music, and because it's a game, they'll pick up the guitar just because that's the instrument that works with the game. There's a lot of different ways that people will purchase this game, and you just have to let it out there for a while and see what the pattern is, but I think for the most part it's going to be kids who want to learn how to play."

Games are already part of education in schools. Ubisoft, in partnership with the American Alliance for Health, Physical Education, Recreation, and Dance (AAHPERD) has used videogames to get kids active. The game maker has over 30 middle and high schools in the U.S. using Just Dance 2014 as part of physical education. Konami Digital Entertainment has implemented DanceDanceRevolution Classroom Edition in schools around the country.

"It seems like it would be a great, fun tool in a music classroom to be able to learn guitar," said Slash. "Sometimes you have to think of creative ways to turn kids on, so this would be a perfect tool if you were the teacher trying to teach kids how to play guitar using more contemporary popular music. It would make it way more intriguing for whatever the age is — 7-year-olds up to like 15-year-olds — to actually learn how to play songs that way, rather than going to the page in the music book and learning an exercise."

Even beyond music videogames, gaming has emerged as a great way for new artists to get heard in today's crowded digital entertainment landscape. And it gives established bands a ripe avenue of distribution to a growing audience of gamers.

"Radio is dead, and the actual record industry is pretty much dead, so videogames are great exposure for your music, which was always more important to me" said Slash. "It's worked on both sides creatively and also has been a good business model. It's also very cool depending on the game, it's often times really great to be a part of a popular game and having kids playing something where your song is featured."

While he's embraced gaming technology, Slash was slow to come around to the social media revolution.

"It's funny, I'm the perfect guy to not be interested with anything having to do with social media because I'm not a social person," said Slash. "But what happened was when I was making my first solo record, someone had mentioned Twitter TWTR to me and what it did exactly because I didn't even know, and I thought what a great way to promote your stuff. I got on Twitter and then not long after that I hooked up a Facebook FB account as well. Now that's my main tool for marketing."

Slash continues to create new music. And he's likely to make new younger fans through BandFuse, helping to inspire the next generation of rock musicians.